the demand for healthcare services in india has grown from

8/2/2019 The Demand for Healthcare Services in India Has Grown From

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The demand for healthcare services in India has grown from $ 4.8 billion in

1991 to $ 22.8 billion in 2001-02, indicating a compounded annual growth rate

of 16 per cent. The healthcare industry accounted for 5.2 per cent of Indias

GDP in 2002, and this figure could reach $ 47 billion or 6.27.5 per cent of

GDP by 2012. On the one hand, the Indian middle class, with its increasing

purchasing power, is more willing than ever before to pay more for quality

healthcare. On the other, the supply of healthcare services has grown steadily,as the private sector becomes more involved in owning and running hospitals.

This report describes the growth trends in healthcare services. The report analyses the increasing

share of privately owned healthcare facilities. Profile of major players and impact of major regulatory

changes are also highlighted in this report.

Indian healthcare is experiencing a transformation, with the commencement of newer, better IT

applications. With the rise in the per capita income of the Indian population, the demand for quality

healthcare services in the country has risen. p This has compelled Indian hospitals and services

providers to invest in the sector. Consequently, adoption of IT has become one of the top priorities for

the Indian healthcare companies.

According to a new research Opportunities in Indian Healthcare IT Market, the healthcare IT market

in India is projected to become a USD 250 million market by 2010 year end. The research report

provides a comprehensive and crisp analysis of the current status and future growth prospects of

Indian Healthcare IT market. The report studies the market by segmenting in into two major

segments, i.e. Hospital Information System and, Storage and Communication System and

substantiates key findings with necessary statistics. Besides this, the report also provides information

on the various issues, which if not addressed might hamper the growth of the Indian Healthcare IT

market.

The report gives an overview of the competitive landscape, in which leading industry players have

been covered along with their marketing strategies, operations and business overview. Also

highlighted in the report are various opportunities existing in the industry which will help clients in

understanding the contemporary industry scenario and making decisions accordingly.

Key findings in the report include:

- Indias private healthcare sector, which currently contributes around 75 per cent of the total

healthcare expenditure in India, is expected to increase its spending on IT products and services

substantially in near future

- Indias private healthcare sector, which currently contributes around 75 per cent of the total

healthcare expenditure in India, is expected to increase its spending on IT products and services

substantially in near future

- With increasing IT applications and insurance penetration, the demand for EMR is anticipated to

increase robustly in next few years. However, initially the scope of the services will be limited to the

Metro and Tier I cities only.

- With the increasing emphasis on the implementation of hospital information system in the country,

the market of instruments such as PACS will grow rapidly. However, the success of these factors will

largely depend upon various factors including technology adoption initiatives and cost.


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The world healthcare IT market is expected to grow from $99.6 billion in 2010 to $162.2 billion in

2015, at a CAGR of 10.2% from 2010 to 2015.

Need to cut healthcare costs, enhance clinical/administrative workflow of hospitals, and huge demand

for faster, error-free, efficient healthcare delivery, is fueling the healthcare provider IT market

worldwide. Furthermore, the initiatives taken by the government for adoption of healthcare IT systems

globally are also a significant driving force. Some of the major initiatives expected to hugely impactthe market are the U.S Healthcare reforms and ARRA incentives.

EMR is expected to the highest growing market with a CAGR of 16.7% from 2010 to 2015. CPOE is

also a fast growing segment with a CAGR of 16.5% from 2010 to 2015. Point of care information

systems, specialty care information systems (cardiovascular information systems, oncology

information systems), surgical and intensive care information systems are expected to have a

combined CAGR of 15.1% from 2010 to 2015.

Low cost IT solutions, financing programs, and interoperable solutions are the focus of top healthcare

IT solution providers. With rising adoption of healthcare IT, healthcare delivery models are expected to

evolve from clinic centric to patient centric models such as preventive healthcare, remote patient

monitoring, telemedicine, and home healthcare. Healthcare industry has always faced immense needfor cutting edge technology for patient treatments and monitoring. However, the industry has been

slow in adopting IT technologies in their workflow. The scenario is nevertheless changing now, with

greater need to cut healthcare costs, immense demand for faster, better healthcare delivery along

with reduced medical errors. Healthcare IT enhances clinical and administrative workflow and thus is

increasingly being used as a strategy to reduce operating costs and improves the efficiency of

healthcare delivery. Healthcare IT systems come across as a cost effective solution for augmenting the

clinical and administrative workflow of healthcare providers.

The significant increase in demand for medical care has also increased the chances of error in

diagnosis and claim settlement. This has lead to the introduction of systems such as CPOE

(computerized physician order entry systems), integrated systems such as enterprise-wide PACS

(picture archive and communication systems), EMR (electronic medical record). These not only helpedreduce medical errors, but also helped improve the management of health related information.

Understanding the healthcare industry structure can help in gaining an insight into the changing needs

of its affiliated IT market. The healthcare industry consists of three major participants the providers,

the payors, and the consumers. As the overall industry is moving towards integration, an insight into

each participants needs could help system providers design overarching systems that simultaneously

cater to all the unmet requirements. Healthcare providers consist of large to small hospitals, clinics,

nursing homes, research/educational institutions, and independent physicians. Payors consist of

various government and non-government organizations offering insurance policies and claim

processing services. Finally, consumers include patients maintaining their medical data.

Meditech (U.S.), Cerner Corporation (U.S.), Mckesson Corporation (U.S.), Siemens Healthcare(Germany), Epic Systems (U.S), Allscripts (U.S.), Philips (The Netherlands), and GE Healthcare (U.S.)

account for the majority of the market.

Scope of the report:

This research report evaluates the world healthcare IT market with respect to the product market. The

report analyzes geography; forecasting revenues, and trends in each of the following submarkets:


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- Hardware

- Software

- Services

Each section will provide market data, market drivers, trends and opportunities, top-selling products,key players, and competitive outlook. This report will also provide market tables for covering the sub-

segments and micro-markets. In addition, company profiles covering all the sub-segments will be

given.

Healthcare Issues

[edit] Malnutrition

42% of Indias children below the age of three are malnourished, almost twice the statistics ofsub-Saharan African region of 28%.[1]World Bank estimates this figure to be 60 million childrenout of a global estimated total of 146 million.[2]Although Indias economy grew 50% from20012006, its child-malnutrition rate only dropped 1%, lagging behind countries of similargrowth rate.[3]Malnutrition impedes the social and cognitive development of a child, reducinghis educational attainment and income as an adult.[3]These irreversible damages result in lowerproductivity.[3]

[edit] High infant mortality rate

Approximately 1.72 million children die each year before turning one.[4]The under five mortalityrate and infant mortality rate indicators have been declining, from 202 and 190 deaths perthousand live births respectively in 1970 to 64 and 50 deaths per thousand live births in2009.[4][5]However, this rate of decline is slowing. Reduced funding for immunization leavesonly 43.5% of the young fully immunized.[3]Infrastructures like hospitals, roads, water andsanitation are lacking in rural areas.[6]Shortages of healthcare providers, poor intra-partum andnewborn care, diarrheal diseases and acute respiratory infections, also contribute to the highinfant mortality rate.[4]

[edit] Diseases

Diseases such as dengue fever, hepatitis,tuberculosis, malaria and pneumonia continue to plagueIndia due to increased resistance to drugs.[7]And in 2011, India finally developed a Totally drug-resistantform of tuberculosis.[8]India is ranked 3rd among the countries with the most numberof HIV-infected.[9]Diarrheal diseases are the primary causes of early childhood mortality.[10]
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These diseases can be attributed to poor sanitation and inadequate safe drinking water inIndia.[11]

However in 2012, India was polio free for the first time in its history.[12]

Indians are also at particularly high risk for atherosclerosis and coronary artery disease. This maybe attributed to a genetic predisposition to metabolic syndrome and changes in coronary arteryvasodilation. NGOs such as the Indian Heart Foundation and the Medwin Foundation have beencreated to raise awareness about this public health issue.[13][14]

[edit] Poor sanitation

As more than 122 million households have no toilets and 33% lack access to latrines, over 50%of the population (638 million) defecates in the open.[15]This is relatively higher thanBangladesh and Brazil (7%) and China (4%).[15]Although 211 million people gained access toimproved sanitation from 19902008, only 31% uses them.[15]11% of the Indian rural families

dispose of child stools safely whereas 80% of the population leave their stools in the open orthrow them into the garbage.[15]Open air defecation leads to the spreading of diseases andmalnutrition through parasitic and bacterial infections.[16]

[edit] Inadequate safe drinking water

Access to protected sources of drinking water has improved from 68% of the population in 1990to 88% in 2008.[15]However, only 26% of the slum population has access to safe drinkingwater[16]and 25% of the total population has drinking water on their premises.[15]This problem isexacerbated by falling levels of groundwater, caused mainly by increasing extraction forirrigation.[15]Insufficient maintenance of the environment around water sources, groundwater

pollution, excessive arsenic and fluoride in drinking water pose a major threat to India'shealth.[15]

[edit] Healthcare infrastructure

The Indian healthcare industry is seen to be growing at a rapid pace and is expected to become aUS$280 billion industry by 2020.[17]

Rising income levels and a growing elderly population are all factors that are driving this growth.In addition, changing demographics, disease profiles and the shift from chronic to lifestylediseases in the country has led to increased spending on healthcare delivery.[18]

In order to meet manpower shortages and reach world standards India would require investmentsof up to $20 billion over the next 5 years.[19]
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The healthcare sector in India is undergoing a phase of reformpropelled by rapid economic growth. Apart from the healthcareproviders, emerging markets such as diagnostic chains andmedical device manufacturers, are attracting increasingamounts of investment.

In comparison to all 32 states, Maharashtra forecasted tomaintain its dominance as the state with highest cumulative

healthcare infrastructure expenditure, with spend of $ 7.3billion between 2009 - 2013.

Twelve states spent less than $100million each in 2006,together representing less than 4.5 per cent of total nationalexpenditure and 3.6 per cent of the population.

Manipur and Nagaland expected to grow the fastest ondevelopment of healthcare expenditure over 8 per cent,

against an overall national average of 5.8 percent (between2009 - 2013).

Uttar Pradesh that hosts over 16 percent of the population ispresently amongst lowest spenders in terms of expenditureper person (less than $ 5 as per 2006 figures, expected togrow to USD 25 between 2009-2013).

Booming Indian healthcare industryMay 19, 2011

Industry SnapshotThe Indian healthcare sector is predicted to reach US$ 280 billion by 2020, contributing an expected

Gross Domestic Product (GDP) spend of 8 per cent by 2012 from 5.5 per cent in 2009, according to a

report by an industry body. Growing population, increasing lifestyle related health issues, cheaper

treatment costs, thrust in medical tourism, improving health insurance penetration, increasing disposable

income, government initiatives and focus on Public Private Partnership (PPP) models are some of the

driving factors for the growth of healthcare sector in India.

Some of the key players in the Indian healthcare industry who are helping in making the sector buyout

include Apollo Hospitals Enterprise Ltd., Fortis Healthcare Ltd, Max Hospitals and Aravind Eye Hospitals.

Key players in healthcare industry

Company No. Ofbeds Presence


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Apollo

HospitalsEnterprise

Ltd

8,500

Chennai, Madurai, Hyderabad, Karur,

Karim Nagar, Mysore, Visakhapatnam,

Bilaspur, Aragonda, Kakindada,

Bengaluru, Delhi, Noida, Kolkata,

Ahmedabad, Mauritius, Pune, Raichur,

Ranipet, Ranchi, Ludhiana, Indore,

Bhubaneswar, Dhaka

Aarvind Eye

Hospitals

3,649Theni, Tirunelveli, Coimbatore,

Puducherry, Madurai, Amethi, Kolkata

CARE

Hospitals1,400

Hyderabad, Vijaywada, Nagpur, Rajpur,

Bhubaneshwar, Surat, Pune,

Visakhapatnam

Fortis

Healthcare

Ltd

5,044

Mumbai, Bengaluru, Kolkata, Mohali,

Noida, Delhi, Amristar, Rajpur, Jaipur,

Chennai, Kota

Max

Hospitals800 Delhi and NCR

Manipal

Group of

Hospitals

+7,000

Udupi, Bengaluru, Manipal, Attavar,

Mangalore, Goa, Tumkur, Vijaywada,

Kasaragod, Visakhapatnam

Source: E&Y, November 2010


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Challenges and OpportunitiesOwing to the fact that the healthcare sector is one of the largest service sector industries in India with an

estimated revenue of US$ 35 billion, the industry has also emerged as on the of most challenging sectors

as well.

India would require another 1.75 million beds by the end of 2025 to reach a ratio of two beds per 1000population.

An additional 0.7 million doctors are needed to reach a doctor population ratio of 1:1000 by 2025. Although the health insurance sector is projected to grow to US$3.8 bill ion, the health insurance

penetration rate still has a lot more scope to grow with only 2 per cent of the total population being

insured at present.

The government recognised the significant challenges and potential in the sector and provided priority

status to healthcare in the Eleventh Five Year Plan. Further, the sector is expected to witness added growth

through a well-defined partnership between the government and the private sector.

Meanwhile, the total healthcare infrastructure expenditure is expected to reach US$ 14.2 billion in 2013,

registering an increase of 50 per cent as compared to the 2006 figure, according to a report by KPMG.

Average annual growth rate forecast in healthcare infrastructure expenditure 2009-2013

Source: Global Infrastructure: Trend Monitor Indian Healthcare Edition: Outlook 20092013, KPMG

Investments


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The sector is undergoing significant changes driven by the continuing phase of rapid economic growth,

with emerging markets, such as medical device manufacturers and diagnostic chains attracting increasing

amounts of investments.

Cumulative FDI inflow (April 2000 to February 2011)

Sector FDI inflow (US$ million)

Hospital and diagnostic centres 998.11

Medical and surgical appliances 387.52

Drugs and pharmaceuticals 1,882.30

Source: Department of Industrial Policy & Promotion (DIPP)

Major Investments Hospitals chain Apollo Hospitals Enterprise Ltd plans to invest around US$ 204.04 million- US$ 226.70

million over the next two years.

Wockhardt Hospitals plans to invest up to US$ 158.32 million to double its bed capacity to 2,000 by 2013. Hospitals chain Fortis Healthcare plans to invest US$ 146.81 million and add 2,100 new beds. The BCG Group plans to build a multidisciplinary health facility, BCG Healthsquare in Palarivattam in Kochi,

Kerala, by August 2011. The companys long-term plan is to set a 750,000 sq ft health village with an

estimated cost of US$ 88.91 million.

GE Healthcare will invest US$ 50 million to set up more facilities for developing diagnostic services. Manipal Hospitals plans to invest US$ 45.23 million in the next three years to double its capacity to 8,000

beds.

PPP ModelPrivate healthcare is emerging as one of the fasting growing sectors in India, with hospital chains

exploring the markets in metros and tier II cities, private players seeking accreditation and developing newhealthcare models. Further, the private and public sectors across various states such as Gujarat and

Uttarakhand have launched innovative initiatives to attract PPP investments into healthcare.

While the government is exploring potential to establish state-funded healthcare insurance schemes for

supporting healthcare delivery for the poorer sections of the population, the corporate segment is catering

to the growing need of the general public for quality care. Thus, through a sustainable partnership,


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development and delivery of low cost, affordable, basic healthcare services, PPP models may help in

improving the infrastructure and healthcare provision in the country.

Key Developments

Rural healthcare sector in the country is also witnessing an upsurge. The rural health sector has addedaround 15,000 health sub-centres and 28,000 nurses and midwives during the last five years, accordingto the Rural Health Survey Report 2009, released by the Ministry of Health. The number of primary health

centres has increased by 84 per cent, taking the number to 20,107, according to the report.

Indian health insurance market represents one the fastest growing and second largest non-life insurancesegment in the country, according to a report by research firm RNCOS. The health insurance premium is

expected to grow at a Compound Annual Growth rate (CAGR) of over 25 per cent for the period spanning

from 2009-10 to 2013-14, according to the report.

Indias share in the global medical tourism industry is predicted to be around 3 per cent by the end of2013, according to a report Booming Medical Tourism in India by research firm RNCOS, released in

December 2010. The sector is expected to generate around US$ 3 billion in revenues by 2013, with the

number of medical tourists to grow at a CAGR of over 19 per cent during 2011-2013 to reach 1.3 millionby 2013.

Indian medical technology industry is expected to reach US$ 14 billion by 2020 from US$ 2.7 billion in2008, according to a report by PwC and an industry body.

The countrys first healthcare Special Economic Zone (SEZ), Frontier Mediville, is being set up by FrontierLifeline Hospital at Elavoor, near Chennai.

Major healthcare players such as Fortis and Apollo are expanding to tier-II and tier-III cities, along withurban cities, due to substantial demand for high-quality and specialty healthcare services in these cities.

Healthcare majors such as Apollo, Max Healthcare and Manipal Group are targeting new segments such asprimary care and diagnostics. Demographics, health awareness and increasing capacity to spend are the

key drivers of the preventive healthcare segment in India.

Computer-based bio-surveillance projects generating data about diseases and creating databases onhealthcare in rural areas are gaining popularity in India with various organisations such as Narayana

Hrudayalaya and the Mazumdar Shaw Cancer Centre entering into this sector.

Government Policies Government initiatives in the public health sector have recorded some noteworthy successes over time

with focus on investments related to better medical infrastructure, rural health facilities etc.

100 per cent FDI is permitted for health and medical services under the automatic route. The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the upgradation and

capacity enhancement of healthcare facilities.

Moreover, in order to meet revised cost of construction, in March 2010 the Government allocated anadditional US$ 1.23 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing

Government Medical Colleges.


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Healthcare in IndiaFeb 27, 2012

The Indian healthcare sector, currently at US$ 65 billion, is expected to reach US$ 100 billion by 2015,

growing at around 20 per cent a year, according to rating agency Fitch. Some of the major factors driving

the growth in the sector include increasing population, growing lifestyle related health issues, cheapercosts for treatment, thrust in medical tourism, improving health insurance penetration, increasing

disposable income, government initiatives and focus on Public Private Partnership (PPP) models.

SECTOR FACTS

FDI inflow in hospital and diagnostic centres was US$ 1.1 billion during April 2000 and November 2011,according to the latest Department of Industrial Policy & Promotion (DIPP) data

FDI inflow in medical and surgical appliances stood at US$ 472.6 million during the same period,according to the latest DIPP data

The drugs and pharmaceuticals sector has attracted FDI worth US$ 5.0 billion between April 2000 andNovember 2011

Investment Opportunities

According to a survey conducted by consulting firm, Grant Thornton, India is expected to witness the

largest number of merger and acquisitions (M&As) in the pharmaceutical and healthcare sector in 2012.

The survey that was being conducted across 100 companies stated that fourth of the respondents were

bullish on acquiring companies in the pharmaceutical space.

"The expectations of M&A activity in the pharma and healthcare sector could be explained by factors such

as the impending patent cliff in the US, the increasing attractiveness of India as a low-cost R&Ddestination and the increasing success of Indian firms in getting ANDA approvals," said Sunil Makharia

executive VP (finance) Lupin Pharmaceuticals. Patent cliff refers to expiry of legal protection to top-selling

drugs.

According to a report by PriceWaterhouseCoopers, an estimated 189 million people in the country will be

more than 60 years of age by 2025, needing higher healthcare spends.

A combined study by an industry body and Ernst & Young suggests that India will need as many as 1.75

million additional beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve

1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025.

Medical tourism in India has also received a boost with arrival of patients from countries with advanced

medical systems. This underlines the fact that India has good infrastructure and talent.

According to a new report published by RNCOS, titled "Booming Medical Tourism in India" Indias share in

the global medical tourism industry will reach around 3 per cent by the end of 2013. The report states

that medical tourism is expected to generate revenue around US$ 3 billion by 2013, growing at a CAGR of


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around 26 per cent during 20112013. The number of medical tourists is anticipated to grow at a CAGR of

over 19 per cent during the forecast period to reach 1.3 million by 2013.

Hospital trade is a growing business opportunity for other sectors such as food retail as some large

hospitals are getting almost 1,000-1,500 outpatients per day and visitors for inpatients who are also

potential customers. Food retail has about 15 per cent of its business coming from hospitals. Au Bon Painhas one outlet at Cradle, a maternity hospital in Bengaluru, and is likely to set up four more in one year

through this format. The US-based bakery chain is now looking at West Asia and India as potential growth

markets for this format.

The rural healthcare sector is also witnessing considerable growth, with the sector adding around 15,000

health sub-centres and employing 28,000 nurses and midwives during the last five years, as per the Rural

Health Survey Report 2009 of the Ministry of Health. As per the report, the primary health centres in the

country has reached 20,107, growing by 84 per cent.

The Indian health insurance market is also on an upsurge providing lucrative growth avenue for both the

existing players as well as the new entrants. According to the RNCOS report, the health insurance marketis one the fastest growing and second largest non-life insurance segment in the country. Posting

tremendous growth in the last two fiscals, the health insurance premium is expected to grow at a CAGR of

over 25 per cent for the period spanning from 2009-10 to 2013-14.

The Andhra Pradesh government has successfully implemented the US$ 59.68 million Health Management

Project funded by the Department for International Development (DFID) of the UK. Other states as well are

considering implementing similar models.

With 3G there are possibilities of remote treatment and diagnosis of patients through mobile phones.

Also, with the number of cellphone users currently at 600 million and rapidly increasing by 20 million

every month, some telecom operators and value-added service developers such as Nokia and BlackBerryare considering usage of mobile phones for diagnostic and treatment support, remote disease monitoring,

health awareness and communication.

As per the report, "Healthcare Information Technology Market in India" released by Frost & Sullivan

electronic medical record (EMR) services have a high growth potential at an estimated compound annual

growth rate (CAGR) of 13.5 per cent from 2009 to 2016. With many new private hospitals opening in the

next few years, investment in EMR is expected to become a necessity for these hospitals.

Investment Policy Updates

Government initiatives in the public health sector have recorded some noteworthy successes over time

with focus on investments related to better medical infrastructure, rural health facilities etc.

100 per cent FDI is permitted for health and medical services under the automatic route. The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the upgradation and

capacity enhancement of healthcare facilities.


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Moreover, in order to meet revised cost of construction, in March 2010 the Government allocated anadditional US$ 1.23 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing

Government Medical Colleges

the demand for healthcare services in india has grown from

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